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Market Wrap
(Briefing):

Just a few Fed words was all it took to erase a day of modest gains, as the major averages closed near session lows... While this morning's PPI data initially provided investors with a tinge of optimism, as Feb core PPI of 0.1% (consensus 0.1%) - which excludes high energy costs - eased inflation fears, the language of the FOMC's policy statement declared a slightly different message... As widely expected, the Fed raised the fed funds rate by 25 basis points to 2.75% for the seventh consecutive time and maintained a balanced risk assessment saying "policy accommodation can be removed at a pace that is likely to be measured"... However, additions to the policy statement that cited "pressures on inflation have picked up in recent months and pricing power is more evident" underpinned worries that producers are now more apt to raise prices to offset higher costs... The news unnerved the bond market and renewed fears of more aggressive Fed tightening, pounding Tresurys enough to lift yields on the benchmark 10-year note (-22/32) to 4.61% - levels not seen since last July - subsequently pummeling stocks, reversing a bullish bias and closing virtually every sector in the red... Software (-2.4%) paced the list of laggards, following downside FY05 EPS and revenue guidance from Electronic Arts (ERTS 55.20 -11.15) and concerns ahead of Oracle Corp's (ORCL 12.50 -0.15) Q3 earnings report, as Technology was weak across the board... Interest-rate sensitive issues like Financial (-1.9%), Utility (-1.9%) and REITs (-2.2%) also got hammered after bond yields surged while Telecom Services (-1.2%), Consumer Discretionary (-0.8%), Industrials (-0.6%) and Health Care (-0.1%) also finished to the downside... Energy ended the day lower as crude oil prices closed down 2.5% at $56.03/bbl (-$1.43) - a drubbing in the commodity that had temporarily lifted the indices to session highs ahead of the FOMC's report... Materials (-0.4%) traded higher throughout most of the session, lifted by strength in Steel and a weak greenback, but lost ground into the close as the dollar recovered lost ground... The dollar rallied against both the euro (1.3081) and the yen (105.56) as bonds became less attractive... Homebuilding (+0.2%) however, amid better than expected Q1 earnings and upside FY05 guidance from Lennar (LEN 55.80 +0.93) and KB Home (KBH 118.25 +1.55), held onto modest gains despite higher bond yields... Transportation also posted modest gains, led by resilience in Airline (+1.0%) and upside Q1 guidance from railroad operator Union Pacific (UNP 69.43 +3.36)... Separately, reports that lawyers have begun talks to settle the government's fraud and racketeering case against cigarette makers minimized losses in Consumer Staples (-0.5%)... ..DJTA +0.1%. ..DJUA -2.0%. ..SOX -0.8%. ..DOT -1.2%. ..XOI -1.8%. ..BTK -0.6%. ..Nasdaq 100 -1.3%. ..S&P Midcap 400 -0.5%. ..Russell 2000 -0.5%. ..NYSE Adv/Dec 964/2363. ..NASDAQ Adv/Dec 1183/1902.

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Trade system guidelines (edited):
Only available to Newsletter Subscribers.

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Today's Picks - March 23, 2005

1.   MEOH - Methanex Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-23		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 19.73

2.   HMA - Health Management

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-23		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 24.69

3.   RIMM - Research in Motion

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-23		Short	Below 15 min low	Cover 1/2 once risk covered	Above HOD at time of setup
	* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 76.90

4.   COP - Conoco Phillips

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-23		Short	Below 15 min low	Cover 1/2 once risk covered	Above HOD at time of setup
	* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 106.90

5.   APC - Anadarko Petroleum

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-23		Short	Below 15 min low	Cover 1/2 once risk covered	Above HOD at time of setup
	* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 75.19

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EOD = End of day.
LOD = Low of day.
PDC = Previous Day's Close.
S/R = Support/Resistance.
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